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Wrong Answer Notes MG301
Mock Michaelmas 2017 * Nash Equil - best response to what players believe to be other's strats and those beliefs are true * Strategic compliments are for games * When in doubt: differentiate, find unknowns, make first diff equal to zero * Don't forget about commitment by the incumbent in entry games * Need to find x, the consumer in hotelling questions. It's gonna be complicated as fuck. Fucking hell jesus christ. Mock Lent 2015 * TLDR: you get the concept but sometimes fuck up the calculations or remember all the details, learn exact definition from answers! * pay to play, piece rate = profit margin for optimal pay for performance * measure performance, less risk-averse worker the better, more financially able the worker the better, more alignement with company and consumer the better - less adaptation costs, reduce multitasking by incentivising activities that benefit firm, know which activities benefit firm * Check - worker sees entire firm/team surplus. No check - worker sees only own surplus * Set optimal output as goal and if not achieved, nobody gets anything. Budget breaking. Where does money go? Who takes it? How can you ensure nash equilibrium? * RPE - others do better, I get less. JPE - others do better, I do better. * There are two types of knowledge: tacit and explicit. * There is a cost to learning knowledge * There usually always is a cost to dong things. People will try not to them if cost is not as good as payoff. * Problems occurring is based on probability. Assessing whether to learn knowledge to solve these problems is based on probability of problem occurring and personal cost of learning the knowledge. * Knowledge can be costly to transfer * Rent and quasi-rent. The terms are: asset, return, owner, transaction, bargaining. Not colloquial terms. * Larger the quasi-rent, the more bargaining there is. * own profit + 1/n(joint surplus - own profit - the other guy's profit) Specimen 2015 * Decision Making in Organisations * probabilities * when calculating expected profits calculate in terms of what the manager thinks the profit will be not the worker * when not investing, you multiply zero by the probability of the profit occurring * as long as E(profit)>0 (make subject p) to find the condition of investing for manager * Find the investing conditions for worker and manager. Compare the two using >, < signs and find the condition for which worker will be delegated decision making. * Structure of Organisation * when all costs are observable, use a sequential tree diagram to see what the manager will do * which one they will send is self explanatory, the lower cost one is sent * the cost they are willing to pay for information is: cost from no info - cost with full info, ie the amount they save from knowing everything because they usually have higher costs from lack of info * Entry and comp * subgame nash equilibrium - the profile of strategies that lead to a nash equilibrium in every subgame * think sequentially even though the question doesn't seem like it in a sequential entry game Summer 2016 * Write down the topic of the question at the top to trigger memory. * The questions are not going to be too ridiculous, don't worry. * Pay for performance * marginal benefit = marginal cost when actions can't be monitored * Information symmetry, asymmetry, signalling * remember fractions * Innovation * Drastic innovation leads to monopoly profits * Remember market structure. Homogeneous goods is perfect competition and make zero profits. * In non drastic innovation the firm with the innovation will charge market price but use the lowered cost for calculating profits * Competitive Advantage * Differentiation softens price competition * Complimentary firms can have strong bargaining power to reduce value captured * 1/n-cost for no monitor R - cost for monitor Summer 2015 * Ask yourself: What would X want to maximise? What is the minimum amount that would satisfy X? What are the conditions needed to satisfy the maximisation condition? * Strategic Compliments and Strategic Substitutes are different from Compliment goods and Substitute goods. Lambda > 0 is Former. Lambda < 0 Latter. * As Lambda ~> 1 products become homogenous substitutes. As Lambda ~> 0 products become differentiated. As Lambda < 0, products are compliments. * Sometimes questions don't ask general stuff, they ask stuff specific to the question situation *Forced contract(can see worker effort) = Profit - Wage. Wage = Cost of effort by worker. Diff by effort for optimal effort given by worker. *If unable to see worker effort = Profit - Wage - Bonus. Diff by bonus b for optimal bonus.